AlTi Global Inc

Previous wording

We are a global wealth management firm, with a diverse array of investment, advisory, and administrative capabilities with which we serve our clients and investors; and provide value to our shareholders. Our business is currently organized into two business segments: Wealth Management and Strategic Alternatives (formerly known as Asset Management):

Current wording

We are a global wealth management firm, with a diverse array of investment, advisory, and administrative capabilities with which we serve our clients and investors, and provide value to our shareholders. As of the third quarter ended September 30, 2024, management completed a strategic review of certain businesses within the historically defined Strategic Alternatives segment. This review considered, among other things, changes to our legal entity structure as well as changes of the components included within the operating segments outlined below. As part of the changes of our segment composition, our business is currently organized into two business segments - Wealth & Capital Solutions and International Real Estate:

Previous wording

•we manage or advise approximately $71.9 billion in combined assets as of June 30, 2024;

Current wording

•we manage or advise approximately $77.3 billion in combined assets as of September 30, 2024;

Previous wording

•in our Wealth Management segment, we provide holistic solutions for our wealth management clients through our full spectrum of wealth management services, including discretionary investment management services, non-discretionary investment advisory services, trust services, administration services, and family office services;

Current wording

•in our Wealth & Capital Solutions segment, we provide holistic solutions for our wealth management and alternative investments clients through our full spectrum of wealth and asset management services, including discretionary investment management services, non-discretionary investment advisory services, trust services, administration services, and family office services;

Previous wording

•in our Strategic Alternatives segment, we assist our investors with alternative investments and co-investments by providing access to highly differentiated opportunities in these areas as well as structuring and selecting partners with a proven track record in alternative asset classes, with attractive risk adjusted return characteristics.

Current wording

•in our International Real Estate segment, we assist our investors with real estate co-investments by providing access to highly differentiated opportunities in these areas as well as structuring and selecting partners with a proven track record in alternative asset classes, with attractive risk adjusted return characteristics.

Previous wording

Our business is global, with approximately 430 professionals operating in 20 cities in 9 countries across three continents as of June 30, 2024.

Current wording

Our business is global, with approximately 440 professionals operating in 21 cities in 9 countries across three continents as of September 30, 2024.

Previous wording

The services that we provide form a complementary ecosystem for our target markets of clients, investors, and businesses, many of whom share common interests and goals that we are able to connect and serve. The complementary nature of our services and a differentiated suite of capabilities position us well for organic growth across our business lines. Our strategy includes a focus on inorganic growth through acquisitions and investments in talented managers in exchange for a share of future revenues or profits. We also believe we are well positioned to capitalize on global market trends and dynamics that we see facing our world as well as the industry, clients, investors, and businesses we serve.

Current wording

The services that we provide form a complementary ecosystem for our target markets of clients, investors, and businesses, many of whom share common interests and goals that we can connect and serve. The complementary nature of our services and a differentiated suite of capabilities position us well for organic growth across our business lines. Our strategy includes a focus on inorganic growth through acquisitions and investments in talented managers in exchange for a share of future revenues or profits. We also believe we are well positioned to capitalize on global market trends and dynamics that we see facing our world as well as the industry, clients, investors, and businesses we serve.

Previous wording

Broadly, our revenues fall into four categories: recurring management, advisory, or administration fees; performance or incentive fees; distribution from investments and other income or fees:

Current wording

Broadly, our revenues fall into four categories: (i) recurring management, advisory, or administration fees; (ii) performance or incentive fees; (iii) distribution from investments and (iv) other income or fees:

Previous wording

•Distributions from investments are generated from the equity interests we have in the three external managers pursuant to which we are entitled to distributions based on the terms of the respective arrangements. Distributions from each investment will be recorded upon receipt of the distribution. We receive distributions from our External Strategic Managers through our profit or revenue sharing arrangements that are generated through their management and incentive fees based on performance of the underlying investments. The management component of the distributions is recurring in nature, while the incentive portion is more susceptible to impact from exogenous factors.

Current wording

•Distributions from investments are generated from the equity interests we have in the three external managers pursuant to which we are entitled to distributions based on the terms of the respective arrangements. Distributions from each investment will be recorded upon receipt of the distribution. We receive distributions from our External Strategic Managers through our profit or revenue sharing arrangements that are generated through their management and incentive fees based on the performance of the underlying investments. The management component of the distributions is recurring in nature, while the incentive portion is more susceptible to impact from exogenous factors.

Previous wording

Investment management or advisory fees are the primary source of revenue in our Wealth Management segment. These fees are generally calculated on the basis of a percentage of the value of each client’s assets (AUM or AUA) and are charged using either an average daily balance or ending balance, quarterly in arrears.

Current wording

Investment management or advisory fees are the primary source of revenue in our Wealth & Capital Solutions segment. These fees are generally calculated on the basis of a percentage of the value of each client’s assets (AUM or AUA) and are charged using either an average daily balance or ending balance, quarterly in arrears. Fees from internal fund management and advisory services related to our alternatives platform are approximately 0.75% to 1.5% of the net asset value of the funds’ underlying investments.

Previous wording

We earn management fees in our Strategic Alternatives segment through our alternatives platform (compensation for internal fund management and advisory services), private real estate fund management and private real estate recurring fees. The management fees for the alternatives platform are approximately 0.75% to 1.5% of the net asset value of the funds’ underlying investments. In addition, we generate income from managing and advising a private real estate investment fund. Our fees from managing and advising this vehicle are contained in management and advisory contracts relating to the relevant fund and are typically calculated on a sliding scale of percentages of the asset value, market capitalization or the investor capital of the relevant fund as applicable.

Current wording

We earn management fees in our International Real Estate segment through private real estate fund management and private real estate recurring fees. We generate income for managing and advising a private real estate investment fund. Our fees from managing and advising this vehicle are contained in management and advisory contracts relating to the relevant fund and are typically calculated on a sliding scale of percentages of the asset value, market capitalization or the investor capital of the relevant fund as applicable.

Previous wording

As sponsors of private market direct and co-investment transactions, we generate income from debt and equity structures relating to specified real estate investments or investments in other alternative asset classes. Private market fees include arrangement, retainer, management, advisory, performance, acquisition, promote and other associated fees as well as interest arbitrage for debt structures. Arrangement fees are typically 50 to 100 basis points of equity value contributed into a transaction. Acquisition fees are typically payable where there are no agency fees or where there is an off-market transaction sourced by the team. Such acquisition fees are usually in the range of 50 to 100 basis points of the purchase price of the relevant acquisition. The equity structures are typically medium to long-term (three to ten years) closed-ended structures with fees normally ranging between 50 and 175 basis points of the equity value committed or drawn. The debt structure terms are generally between 12 and 36 months. The investment adviser, general partner or other entity entitled to fees in respect of each of our co-investments receives such fees either monthly, quarterly, or annually.

Current wording

As sponsors of private market direct and co-investment transactions, we generate income from debt and equity structures relating to specified real estate investments or investments in other alternative asset classes. Private market fees include arrangement, retainer, management, advisory, performance, acquisition, promotion and other associated fees as well as interest arbitrage for debt structures. Arrangement fees are typically 50 to 100 basis points of equity value contributed into a transaction. Acquisition fees are typically payable where there are no agency fees or where there is an off-market transaction sourced by the team. Such acquisition fees are usually in the range of 50 to 100 basis points of the purchase price of the relevant acquisition. The equity structures are typically medium to long-term (three to ten years) closed-ended structures with fees normally ranging between 50 and 175 basis points of the equity value committed or drawn. The debt structure terms are generally between 12 and 36 months. The investment adviser, general partner or other entity entitled to fees in respect of each of our co-investments receives such fees either monthly, quarterly, or annually.

Previous wording

We may be entitled to a portion of the performance-related entitlements (such as carried interest or promote) that may be payable on exit from Co-investment transactions. Such revenues are only received if the investor hurdle (i.e. a minimum return to the investor) is reached and may include a catch-up. Carried interest entitlements are based on a percentage of the investor return above such hurdle and are set on a deal and fund basis. Typically, carried interest entitlements represent 10% to 20% of the investors’ equity internal rate of return in excess of an 8% to 15% hurdle, with no carried interest entitlement being payable if the hurdle is not met. In relation to our co-investments, a group company will typically have entered into an advisory or management agreement, or other arrangement, that entitles us to receive a share of base management fees (whether directly or through a joint venture entity) from the inception of the relevant investment or joint venture, through to exit and the liquidation of the relevant transaction vehicle, or as otherwise set out in an approved business plan. Where we have established feeder vehicles for clients, there may also be administration and advisory fees associated with those vehicles (these are earned by our trusts and administration business).

Current wording

We may be entitled to a portion of the performance-related entitlements (such as carried interest or promotion) that may be payable on exit from Co-investment transactions. Such revenues are only received if the investor hurdle (i.e. a minimum return to the investor) is reached and may include a catch-up. Carried interest entitlements are based on a percentage of the investor return above such hurdle and are set on a deal and fund basis. Typically, carried interest entitlements represent 10% to 20% of the investors’ equity internal rate of return in excess of an 8% to 15% hurdle, with no carried interest entitlement being payable if the hurdle is not met. In relation to our co-investments, a group company will typically have entered into an advisory or management agreement, or other arrangement, that entitles us to receive a share of base management fees (whether directly or through a joint venture entity) from the inception of the relevant investment or joint venture, through to exit and the liquidation of the relevant transaction vehicle, or as otherwise set out in an approved business plan. Where we have established feeder vehicles for clients, there may also be administration and advisory fees associated with those vehicles (these are earned by our trusts and administration business).

Previous wording

After significant market gains in 2023, the first half of 2024 continued the pattern of strong equity market performance. The S&P 500 and the MSCI All Country World Index increased by 15.3% and 11.6 % total return, respectively, over the first half, after rising by 26.3% and 22.8% total return, respectively, for the year 2023. Government fixed income markets over the same time frame, the first half to the end of June, came under modest pressure as generally yields rose and bond prices fell. The U.S. Municipal Bond and U.S. Treasury Indices both declined by 0.5%, while the Barclays Global Aggregate Index rose a modest 0.1% over the same time frame. While government bond prices had a more volatile start to the year, it is noteworthy that credit conditions in the U.S. continued to improve with credit spreads — the extra yield over Treasuries that corporate bonds must pay to compensate for extra risk — continued to narrow, resulting in the U.S. High Yield index (iShares iBoxx $ High Yield Corporate Bond ETF) rising by 2.3% year to date to the end of June 2024.

Current wording

After significant market gains in the first half of 2024, the third quarter continued the pattern of strong equity market performance. Government fixed income markets over the third quarter to the end of September, also rallied strongly as generally yields fell and bond prices rose. It is also noteworthy that credit conditions in the U.S. continued to improve with credit spreads — the extra yield over Treasuries that corporate bonds must pay to compensate for extra risk — continued to narrow.

Previous wording

Our fee-based revenue streams are driven by the value of our clients’ portfolio holdings, in the case of our Wealth Management segment or the performance of our varied funds and direct investments in our Strategic Alternatives segment. The overall level of revenues in these businesses, however, does not correlate completely with changes in global equity and fixed income markets.

Current wording

Our fee-based revenue streams are driven by the value of our clients’ portfolio holdings, in the case of our Wealth & Capital Solutions segment or the performance of our varied funds and direct investments in our International Real Estate segment. The overall level of revenues in these businesses, however, does not correlate completely with changes in global equity and fixed income markets.

Previous wording

In our Wealth Management segment, while our client portfolios are well diversified across a range of asset classes and thus are not solely impacted by changes in equities or government bonds, they benefited in the year from the strong performance of our various equity exposures. Client portfolios also include holdings such as gold, credit, infrastructure, and hedge funds that also delivered positive returns in the year. Portfolio fluctuations also depend on multiple additional factors that include, but are not limited to, the level of alternative and private market holdings and the geographic and industry mix of client’s equity assets. We also note that our UHNW client base generally does not need to draw down from their portfolios to support day-to-day living needs and, accordingly, are able to approach portfolio investing with a long-term time horizon. Hence, in terms of behavior, they are less sensitive to short-term changes in market conditions.

Current wording

In our Wealth & Capital Solutions segment, while our client portfolios are well diversified across a range of asset classes and thus are not solely impacted by changes in equities or government bonds, they benefited in the year from the strong performance of these exposures. Client portfolios also include holdings such as gold, credit, infrastructure, and hedge funds that also delivered positive returns for the quarter and year to date. Portfolio performance changes depend on multiple additional factors that include, but are not limited to, the risk profile of each client, the level of alternative and private market holdings and the geographic and industry mix of client’s equity and fixed income assets. We also note that our UHNW client base generally does not need to draw down materially from their portfolios to support day-to-day living needs and, accordingly, are able to approach portfolio investing with a long-term time horizon. Hence, in terms of behavior, they are less sensitive to short-term fluctuations and volatility in market conditions.

Previous wording

In our Strategic Alternatives segment, the majority of our fees are derived from alternative funds which are structured to have low correlation to equity and fixed income markets and in some cases benefit in times of market stress. Our European long-short equity and Asian Credit manager continue to perform well in the first half of the year. With respect to incentive fees earned by our event-driven strategy, US GAAP only permits recognition of such fees when they are fully crystallized, which typically occurs in the fourth quarter of each year.

Current wording

In our Wealth & Capital Solutions segment, fees are also derived from alternative funds which are structured to have low correlation to equity and fixed income markets and in some cases benefit in times of market stress. Our European long-short equity and Asian Credit manager continue to perform well this year. With respect to incentive fees earned by our event-driven strategy, US GAAP only permits recognition of such fees when it is probable there will be no significant reversal, which typically occurs in the fourth quarter of each year.

Previous wording

The higher cost of capital environment, ongoing increases in construction costs and generally stagnating real estate prices are negatively impacting some of the real estate segments in which we operate. These declines impact the level of management fees that we earn. In addition, following completion of the sale of LXi REIT Advisors during the first quarter, the level of management fees we earn from public real estate will decline in future periods. On the private real estate side, the more difficult market and interest rate conditions may reduce the ultimate return expected from some of these investments. It is important to note that these assets are utilized in conjunction with longer-term investment strategies and are not subject to daily market pricing. Given the uncertainty in outlook, and the potential for diminution in value at realization, we modified our billing methodology for certain of our private real estate holdings, which will result in lower fees earned, until monetization.

Current wording

The higher cost of capital environment, ongoing increases in construction costs and generally stagnating real estate prices are negatively impacting some of the real estate segments in which we operate. These declines impact the level of management fees that we earn. On the private real estate side within the International Real Estate segment, the more difficult market and interest rate conditions may reduce the ultimate return expected from some of these investments. It is important to note that these assets are utilized in conjunction with longer-term investment strategies and are not subject to daily market pricing. Given the uncertainty in outlook, and the potential for diminution in value at realization, we modified our billing methodology for certain of our private real estate holdings, which will result in lower fees earned, until monetization.

Previous wording

We believe that the combination of our Wealth Management and Strategic Alternatives segments differentiates us from pure-play firms in both sectors and provides a growing base of recurring and diversified revenues. Since the Business Combination, total AUM/AUA increased by approximately 9%, and within our Wealth Management segment, these have grown 26% since the Business Combination.

Current wording

We believe that the combination of our Wealth & Capital Solutions and International Real Estate segments differentiates us from pure-play firms in both sectors and provides a growing base of recurring and diversified revenues. Since the Business Combination, total AUM/AUA increased by approximately 19%, and within our Wealth & Capital Solutions segment, these have grown 34% since the Business Combination.

Previous wording

In the first half of 2024, we generated revenues of $100.3 million. We believe these results, generated through a combination of strong market performance and organic client wins, are starting to reflect the power of our franchise, which we believe will continue to flow to an improved bottom line as we look forward to the remainder of 2024. Net income was $12.8 million and adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) was approximately $12.3 million for the six months ended June 30, 2024, respectively.

Current wording

For the nine months ended September 30, 2024, we generated revenues of $153.6 million. We believe these results, generated through a combination of strong market performance and organic client wins, are starting to reflect the power of our franchise, which we believe will continue to flow to an improved bottom line as we look forward to the remainder of 2024. Net income was $(98.6) million and adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) was approximately $21.9 million for the nine months ended September 30, 2024, respectively.

Previous wording

Our core businesses continue to perform well. Based on the new initiatives undertaken this year and those that we embarked on during 2023, we expect operating expenses to continue to trend downward in 2024. As these cost savings and other growth initiatives take hold next year, we hope to see the impact of operating leverage-driven improvements and greater consistency in our US GAAP results and Adjusted EBITDA. In addition, we believe that we will be able to deploy the capital raised from the investments from Allianz and Constellation to make accretive investments that will benefit our GAAP results and Adjusted EBITDA in 2024, and beyond.

Current wording

Our core businesses continue to perform well, as reflected in the results of our Wealth Capital Solutions segment, which for the current quarter reported 17% higher revenues 62% higher Adjusted EBITDA compared to the prior year period Further, we continue to focus on efforts to reduce recurring spend on operating costs, while maintaining diligent control on investments in people and infrastructure to facilitate additional scalability and growth. In addition, we believe that we will be able to continue to deploy the capital raised from the investments from Allianz and Constellation to make accretive investments that will benefit our GAAP results and Adjusted EBITDA in future periods.

Previous wording

(c)Add-back of transaction expenses related to the Business Combination and subsequent business combinations/divestitures, including professional fees.

Current wording

(c)Add-back of transaction expenses related to the Business Combination, subsequent acquisitions or divestitures, and issuance of preferred and common stock, including professional fees.

Previous wording

(d)Represents the change in fair value of the warrant liability.

Current wording

(d)Represents the change in fair value of the warrant liabilities.

Previous wording

(f)Represents the change in fair value of the earn-out liability.

Current wording

(f)Represents the change in fair value of the earn-out liabilities.

Previous wording

(j)Represents the amortization of the step-up in equity method investments.

Current wording

(k)Represents the amortization of the step-up in equity method investments.

Previous wording

(k)Represents reported interest, depreciation, amortization, and tax adjustments of the Company's equity method investments.

Current wording

(l)Represents reported interest, depreciation, amortization, and tax adjustments of the Company's equity method investments.

Previous wording

(c)Add-back of transaction expenses related to the Business Combination and subsequent business combinations/divestitures, including professional fees.

Current wording

(c)Add-back of transaction expenses related to the Business Combination, subsequent acquisitions or divestitures, and issuance of preferred and common stock, including professional fees.

Previous wording

(d)Represents the change in fair value of the warrant liability.

Current wording

(d)Represents the change in fair value of the warrant liabilities.

Previous wording

(f)Represents the change in unrealized gains/losses related to Investments held at fair value and includes the non-recurring realized gain for the sale of FOS ($9.4 million).

Current wording

(f)Represents the change in unrealized gains/losses related to Investments held at fair value and in Q2 2024 includes the non-recurring realized gain on the sale of FOS ($9.4 million).

Previous wording

(h)Represents cost to implement organization change to derive cost synergy.

Current wording

(h)Represents cost to implement organizational change to derive cost synergy.

Previous wording

(i)Represents impairment of carried interest/equity method investments.

Current wording

(i)Represents impairment of carried interest/equity method investments and intangible assets.

Previous wording

(j)Represents the amortization of the step-up in equity method investments.

Current wording

(k)Represents the amortization of the step-up in equity method investments.

Previous wording

(k)Represents reported interest, depreciation, amortization, and tax adjustments of the Company's equity method investments.

Current wording

(l)Represents reported interest, depreciation, amortization, and tax adjustments of the Company's equity method investments.

Previous wording

The table below presents the change in our total AUA for our Wealth Management segment for the periods indicated:

Current wording

The table below presents the change in our total AUA for the wealth management businesses within the Wealth & Capital Solutions segment for the periods indicated:

Previous wording

•Assets managed by the alternatives platform, including by TIG Arbitrage (AUM $2.1 billion and $2.4 billion as of June 30, 2024 and December 31, 2023, respectively), and the External Strategic Managers (AUA $5.2 billion and $5.3 billion as of June 30, 2024 and December 31, 2023, respectively);

Current wording

Within the Alternatives platform, assets consists of assets managed by TIG Arbitrage (AUM $2.0 billion and $2.4 billion as of September 30, 2024 and December 31, 2023, respectively), and the External Strategic Managers (AUA $5.2 billion and $5.3 billion as of September 30, 2024 and December 31, 2023, respectively).

Previous wording

The Company’s Strategic Alternatives AUM/AUA includes the following:

Current wording

The Company’s International Real Estate AUM/AUA includes the following:

Previous wording

•Co-investment real estate advisory services, where we include the value of our private market direct and co-investment real estate investments (AUA $8.3 billion and $10.1 billion as of June 30, 2024 and December 31, 2023, respectively); and

Current wording

•Co-investment real estate advisory services, where we include the value of our private market direct and co-investment real estate investments (AUA $8.6 billion and $10.1 billion as of September 30, 2024 and December 31, 2023, respectively); and

Previous wording

•Assets managed in a private real estate investment fund (AUM $0.3 billion and $2.6 billion as of June 30, 2024 and December 31, 2023, respectively) from which we generate fee revenue. The Company’s reported value of these assets is either the net asset value or the market capitalization of the fund.

Current wording

•Assets managed in a private real estate investment fund (AUM $0.4 billion and $2.6 billion as of September 30, 2024 and December 31, 2023, respectively) from which we generate fee revenue. The Company’s reported value of these assets is either the net asset value or the market capitalization of the fund.

Previous wording

The tables below present the change in our total AUM/AUA by strategy and product for our alternatives platform for the three and six months ended June 30, 2024 and June 30, 2023:

Current wording

The tables below present the change in our total AUM/AUA by strategy and product for our alternatives platform for the three and nine months ended September 30, 2024 and September 30, 2023:

Previous wording

The table below presents the change in our total AUM/AUA for our Real Estate - Private Funds for our Strategic Alternatives segment for the periods indicated:

Current wording

The table below presents the change in our total AUM/AUA for our Real Estate - Private Funds for our International Real Estate segment for the periods indicated:

Previous wording

Compensation and Employee Benefits: Compensation generally includes salaries, bonuses, other performance-based compensation such as commissions, long-term deferral programs, benefits, and payroll taxes. Compensation is accrued over the related service period and long-term deferral program awards are paid out based on the various vesting dates.

Current wording

Compensation and Employee Benefits: Compensation generally includes salaries, bonuses, other performance-based compensation such as commissions, long-term deferral programs, benefits, and payroll taxes.